December 18, 2013

Tips for Charitable Giving

It’s the holidays, and you’re feeling especially generous.

But consider this: How you decide to donate can affect how much of your money actually benefits the cause you’d like to support.

Brian Mittendorf, an accounting professor at Ohio State and the writer behind the blog Counting on Charity, specializes in the study of charitable giving, so we chatted with him about how to make sure your dollars are going exactly where you’d like them to.

How can you determine how much of your donation goes directly to a charity’s program?

All non-profits, other than churches, have to file a form 990 with the IRS. They have to make that available to the public. That will have the information in there. It’s like any tax form—it’s kind of messy. That’s probably not the easiest way to access it. For most medium-to-large size charities, you can get that information from different organizations. The first one that comes to mind is charitynavigator.org. They gather all of that data and provide an assessment. They will have the program expense percentage, or what percentage goes toward programs. The other one is guidestar.org. They provide a similar service, but they have the data without doing all of the evaluation. They don’t give a score—charitynavigator.org will give a score. The third one would be foundationcenter.org. They cover a lot more charities, but they don’t provide the data. They just provide the tax form. They have a 990 finder, and you can look up almost any charity and find it.

What are some of the most efficient ways to give?

A couple of things come to mind:

Charities can do better with you giving them money than with you giving them things. They won’t turn away anything, basically, but it’s more cost-efficient for them if you can donate money. There are exceptions to that—places like Goodwill specialize in taking donations in things.

Don’t give over the phone or from a mail solicitation. Those are often sent by for-profit solicitors, who are soliciting on behalf of non-profits. If you get a phone call or mailing on behalf of charities, you can search the Ohio Attorney General’s searchable database. It will say how much of the money you give goes to the telemarketing company, as opposed to the charity. Often more than half of it is kept by the telemarketer.

Go directly to the charity, whether that’s in-person or on their website. If you’re giving online, often fees will feed into your donation. There are some ways you can give where those are waived. PayPal has PayPal Giving, which waives credit card processing fees.

A lot of people like text donations. It’s convenient, but the caveat on texting donations is that it often takes a long time before the charity actually gets it. You text it, and you get a confirmation that you gave the money right away, but the money isn’t transferred to the charity until you pay your phone bill, and the phone company then transfers the money to the processing company, who then transfers it to the charity. It’s often two or three months before the charity ever sees any money, and there are fees associated with that as well.

If you’d like to give locally, where can you search for potential charities?

The local United Way can help sift out which local charities are worthy of your donations. The problem people often have is that they want to help children or people with cancer, and there are a lot of cancer-related charities, and it’s hard to distinguish between them. If you’re interested in giving locally, there are people at United Way who have sifted through and know which ones are reputable and which ones aren’t. The Columbus Foundation has a searchable database of local charities with pertinent information about finances and their missions.